Does the termination or expiration of the Gold Star Franchise Agreement affect the Company's rights against the franchisee?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 26. SURVIVAL OF TERMS AND CONDITIONS. The obligations of FRANCHISEE under Sections 11, 12, 16, and 19.3 hereof, and any other FRANCHISEE obligations herein that are stated to, or are of a type that would reasonably, survive or apply beyond termination or expiration of this Agreement, shall survive any termination or expiration of this Agreement; and expiration or termination of this Agreement shall be without prejudice to the rights of the COMPANY against FRANCHISEE thereunder and with respect to other like matters that reasonably would survive the end of a franchise relationship, and shall not relieve FRANCHISEE of any of FRANCHISEE's obligations to the COMPANY existing at the time of expiration or termination.
- 27. EXPENSES. If the COMPANY incurs any costs or expenses (including but not limited to attorneys' fees, court costs, other litigation expenses, settlement expenses or other expenses of any kind) in enforcing or protecting the COMPANY's rights under this Agreement, or any judgments, orders or awards relating thereto, or in preparation for or investigation or contemplation thereof, the COMPANY shall be entitled to recover from FRANCHISEE all such costs and expenses on demand, with interest from the date due pursuant to Section 8.3, above.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the termination or expiration of the Franchise Agreement does not eliminate Gold Star's rights against the franchisee. Specifically, the obligations of the franchisee under Sections 11, 12, 16, and 19.3 of the agreement, along with any other obligations that reasonably extend beyond the agreement's termination, will remain in effect. This ensures that franchisees are still responsible for fulfilling certain duties even after the agreement ends.
This provision protects Gold Star's interests by ensuring that franchisees cannot avoid their responsibilities simply by allowing the agreement to expire or by terminating it. The types of obligations that survive termination typically include those related to confidentiality, non-competition, and any financial responsibilities the franchisee owes to Gold Star. This is a fairly standard practice in franchising, as franchisors need to protect their brand, trade secrets, and financial interests even after a franchisee leaves the system.
Furthermore, the Franchise Agreement states that termination or expiration does not prejudice Gold Star's rights against the franchisee concerning matters that would reasonably survive the end of the franchise relationship. The franchisee remains obligated to fulfill any existing duties to Gold Star at the time of termination or expiration. This clause reinforces the ongoing responsibilities of the franchisee, providing Gold Star with legal recourse to address any breaches or unfulfilled obligations that persist beyond the agreement's term.
Additionally, if Gold Star incurs any costs to enforce its rights under the Franchise Agreement, including legal fees and court costs, the franchisee is liable for these expenses. This provision further protects Gold Star by ensuring they can recover costs associated with enforcing the agreement, which is a common practice in franchise agreements to deter breaches and ensure compliance.